Newspaper Headline Gave a Distorted Picture of Real Estate Market Under Covid-19

“Hundreds of sellers pull their homes off market,” read the lead headline on the Business page of last Friday’s Denver Post, but the first sentence of the article noted that “thousands [of sellers] went the other way, rushing to list their homes before a major downturn made a sale tougher to achieve.”

The reporter was referring to March statistics quoted by the chair of the market trends committee of the Denver Metro Association of Realtors.

Let’s look at the actual numbers. Yes, 184 listings that were entered during the month of March were “expired” on the MLS by month’s end. Another 443 listings were “withdrawn,” which means the listing agreement is still in effect, but it is not displayed on the MLS until it is made “active” again.

However, 3,525 listings entered last month are already under contract as I write this on April 5th, and another 467 listings have already closed.  Of the ones that closed, 179 were sold before being entered on the MLS, and of the 308 that were exposed to MLS users as active and had already closed by this past weekend, only 13 took longer than a week to go under contract.

 As I write this on April 5th, there are still 4,289 listings that were entered on the MLS during March and are still active.

So, yes, 184 sellers decided not to sell during March, but 8,122 sellers made their homes active on REcolorado during March and did not withdraw or expire them. Another 443 sellers kept their listing agreement active but without exposure on the MLS.  Presumably their listing agents can still sell those listings privately, perhaps keeping their entire commission instead of having to share it with a buyer’s agent.

So the headline was sort of accurate.

By the way, unless the practice has changed since I was a reporter at the Washington Post and then a headline writer at the New York Post, reporters have no say in the headlines that appear above their articles. Instead, a headline writer on the “copy desk” reads the article briefly and writes a headline that fits the assigned character count. As a result, sometimes the headline doesn’t truly reflect the gist of the article, and that may be the case with last Friday’s article.

From the New York Post, I went on to publish several community newspapers in New York City and instructed my reporters to write their own headlines, not knowing what the character count had to be, so the editor had the reporter’s headline as a guide as he rewrote it to fit. 

Getting back to real estate — sorry, I had to vent! — here are the numbers from March 2019:

A total of 7,968 listings were entered as “active” during March 2019, which is fewer than this year, even if you include the 70 listings that were withdrawn by month’s end.  So, not only was the headline misleading, but this March showed increased activity over March 2019.

The fact that 70 listings were expired prematurely in a “normal” month suggests that not all 184 expired listings this year should be attributed to Covid-19.

The market was “hotter” last year, in that over 400 of that month’s listings went under contract in less than 7 days compared to just under 300 this March.

I invite any and all reporters writing about real estate statistics to let me fact check their conclusions prior to publication. And suggest your own headlines!

Can you tell that I enjoy statistical analysis?

Denver Post Series Uncovers the Corruption of Tax Districts Created by Developers

Four years ago, on Dec. 17, 2015, I devoted this weekly column to explaining why property tax rates vary so much around the metro area, mostly due to the creation by developers of “metropolitan  tax districts” to reimburse themselves for the cost of building the infrastructure for their subdivisions. A follow-up column on July 21, 2016, went into greater detail, giving examples of such tax districts created for Stapleton and Green Valley Ranch in Denver and Solterra and Candelas in Jefferson County. For example, in Candelas, adjacent to Rocky Flats, homeowners are paying a 70-mill tax levy on top of Arvada’s mill levy until the tax district infrastructure bonds are paid off. For a home valued at $500,000, that would be an additional property tax burden of nearly $3,000 per year, which would only increase based on rising property values for 30 years following construction. Below is an excerpt from that column, which quoted mill levies in effect that year:

You can read both columns at JimSmithColumns.com, where all my prior columns are archived – or simply click on the links provided above.

It was clear to me back then that homeowners would not recognize the special tax burden they would be facing as they purchased homes, since disclosure of that tax burden is buried in the flurry of documents buyers have to sign at closing.

Now, with more and more owners of homes in such subdivisions realizing what they got themselves into and how unfair it is, it was inevitable that some investigative reporter would dig into this topic in a way that I could not as a full-time Realtor. 

Earlier this month, investigative reporter David Migoya’s multi-part series on this important topic was published in the Denver Post following eight months of research. Perhaps you read that series.

Migoya provides an excellent summary of what these districts are: “Metro districts are taxing authorities created by subdivision developers, with the consent of the local government, for the sole purpose of selling government-like bonds to finance their projects. Repayment of the bonds is tied to future property taxes assessed to the homes that will eventually be built.”

Among the things I learned from Migoya’s multi-part series that I did not know or realize when I wrote about metropolitan tax districts in 2015 and 2016 was that this device of creating special tax districts for infrastructure investments began to be utilized because 1992’s Taxpayer Bill of Rights (TABOR) made it harder for cities or the county to invest in the infrastructure of new subdivisions, even though these subdivisions would ultimately pay for themselves through new property taxes. (I’m not fully convinced of that argument, since many newer subdivisions, including mine, were built without such tax districts.)

Migoya’s series went further to describe the scheming which kept property owners from being able to control the tax districts once the subdivisions were fully built out.

If you are in one of those newer subdivisions, you probably are subject to such a mill levy. If you didn’t read the series when it was published in the main section of this newspaper, I suggest you Google “Denver Post metropolitan tax districts” and read the full series. It should make your blood boil.

One could apply “scandalous” to how these tax districts were created and are run to profit developers at the expense of unwitting future homeowners, but the fact is that what the developers have done is legal, manipulating laws passed by the General Assembly and signed into law by previous Governors.

As Migoya explained so well in his opening installment on Dec. 5th, “Colorado law permits developers to elect themselves to serve on a district’s board of directors, then use that position to approve tens of millions of dollars in public financing for their businesses, and leverage the property taxes on homes they haven’t yet built. No regulations stop these developer-controlled boards from approving arrangements that are financially advantageous to their business, allowing them to finance overly ambitious plans without fear of liability, knowing future homeowners ultimately shoulder the burden.”

Surely the upcoming legislative session will feature hearings and legislation to address the worst abuses of this tax district tool, but the damage may be irreversible in the state’s 1,800 such existing tax districts, since they were created pursuant to existing laws.

Depending on how aware buyers and their agents become of these oversized tax burdens, the resale value of homes in those subdivisions should reflect the fact that they have a far greater tax burden than comparable homes in areas without such a developer-created tax district.  You can count on Golden Real Estate’s brokers being knowledgeable in this area.

The Value of Local Journalism

I have been concerned that the reduction in the reporting staff at the Denver Post would make investigate series like the one above a thing of the past. The “Afghanistan Papers” series by the Washington Post is another example. Subscribers make the investment in such journalism possible, so thank you for subscribing to the Denver Post.

By the way, please note that our “Real Estate Today” column in the Denver Post also needs your support. It is our primary marketing tool. You can assure this column’s continuation by coming to us with your real estate needs and recommending us to others. Thank you!

Digital Editions & Email Newsletters Are the Future of Newspapers

Are you taking advantage of the “Digital Replica Edition” of the Denver Post? You will not only be able to page through today’s paper, including every YourHub section, but also 30 days of past issues. 

As you page through the digital replica of each section, you can single click on any article or ad to make it larger, or double-click on it for more features including printing. On articles, you can enlarge type size for readability.

As subscription prices rise and the circulation of newspapers keeps declining, digital editions are becoming more and more popular. The Denver Post, like other daily newspapers and magazines (and the Denver Business Journal), charges for access to its digital edition, but it is free with any print subscription, even if you pay for less than 7-day home delivery.

Email newsletters and alerts are another digital frontier for newspapers. They contain links that take you to the full articles on their websites. Digital is increasingly how news will be delivered and how newspapers will survive.

If you’re dropping your print subscriptions to newspapers, remember that you can receive my “Real Estate Today” column by email, too.  Send your request to me at Jim@GoldenRealEstate.com!